Diseases of the lung contribute to at least four of the top ten causes of death worldwide. In the United States alone, it is estimated that 11 million people are diagnosed with chronic obstructive lung disease and 24 million people have evidence of impaired lung function. It is conceivable that lung stem cell function is critically affected in pulmonary diseases that exhibit damaged or depleted cells. However, limited information about the identity and characteristics of endogenous lung stem cells precludes understanding their role in the mechanisms of lung disease as well as their potential beneficial uses. Our long-term goal is to elucidate the role of stem cells in lung homeostasis and lung disease. Important for this goal, we identified a murine lung stem cell population, named bronchio-alveolar stem cells (BASCs). This grant will test the hypothesis that BASCs are the stem cells that maintain bronchiolar and alveolar cell homeostasis in vivo. We demonstrated that BASCs can self-renew and give rise to bronchiolar and alveolar lung cell lineages in culture. We also showed that BASCs proliferate in response to bronchiolar and alveolar cell damage in vivo. Using cell transplantation and lineage tracing, we will test the differentiation potential of BASCs in vivo. First, we will develop methods to transplant genetically marked BASCs into the lungs of recipient adult mice, fetal lung explants, and chick embryos to assess their potency. Second, we will generate knock-in mice to express site-specific recombinases in BASCs. These mice will be used with recombinase reporter alleles to permanently label endogenous BASCs and track their fate after lung injury. Finally, we will assess the effect of bronchiolar and alveolar lung injury on BASC functions including self-renewal, differentiation, and gene expression using naphthalene and bleomycin treatment. Completion of the proposed studies will establish a functional assay for lung stem cells. This work will also elucidate how lung disease impacts the function of lung stem cells. These advances are a necessary prerequisite to development of stem cell based therapeutics that could prevent or alleviate lung disease. The identification of BASCs has already had an impact on the way lung biology and lung cancer research is approached. With the studies described in this proposal, it will be possible to create the tools needed to work towards a positive impact on the clinical outcome for patients of pulmonary disease.